Horror story for college coaches began with a swindle to invest in horror films

Lines you'll remember from the FBI press conference on Sept. 26, 2017, announcing arrests for corruption in college basketball.

A graphic used by acting U.S. Attorney for the Southern District of New York Joon H. Kim is displayed during a press conference, help to outline federal corruption charges in the arrest of four assistant basketball coaches from Arizona, Auburn, the University of Southern California and Oklahoma State, Tuesday, Sept. 26, 2017, in New York. (AP Photo/Bebeto Matthews)(Photo: Bebeto Matthews, AP)

Louis Martin “Marty” Blazer III was accused by the Securites and Exchange Commission of misappropriating money from five clients, including two pro athletes, for investments in “Sibling” and “Mafia the Movie.”

In announcing the probe of the “dark underbelly of college basketball” Tuesday, the acting U.S. Attorney for the Southern District of New York didn’t identify the witness, but said it began when a man who “engaged in this in the past” was charged by the SEC and agreed to go undercover.

A criminal complaint that implicates University of Louisville says that the cooperating witness settled SEC civil charges on May 6, 2016 – the day Blazer settled his case. In a news release, the agency said he was accused of taking money without permission from the accounts of several professional athletes for the films, and made “Ponzi-like payments.”

Blazer, of Clinton, Pennsylvania, represented himself in the case. He did not respond to phone messages. Last year he told the Pittsburgh Tribune-Review that the incidents stemmed from “miscommunication that got out of control.”

Blazer agreed to settle the charges without admitting or denying the allegations, the SEC said. In August, a federal judge ordered him to disgorge $1,558,647 and interest of $220,051, representing his profits.

The SEC complaint doesn’t identify the athletes but said Blazer took $550,000 from one even after the client expressly rejected the investment. When he demanded his money back, Blazer repaid him with money taken from another client, the SEC said.

The complaint said the cooperating witness in September pleaded guilty to securities fraud, wire fraud, aggravated identity theft and making false statements, although that case is apparently still sealed.

Blazer was also accused in a brokerage complaint of misappropriating money from former NFL running back Kevan Barlow. Barlow sought $4 million in a complaint with the Financial Industry Regulatory Authority, which was settled in 2012.

FINRA's BrokerCheck says Blazer has been barred from serving as a broker or adviser.

Reporter Andrew Wolfson can be reached at 502-582-7189 or awolfson@courier-journal.com